please find attached our latest newsletter on economic developments in Ukraine. After the convincing double election win of President Zelenskiy and his team, we are very optimistically looking into the coming years in Ukraine. For the first time in more than a decade, a substantial change for the better across many industries can be expected in a country with a huge catch-up potential. The first activities of the new political team give hope for a fast-track implementation of a courageous reform and liberalization agenda. It could be the final trigger to jumpstart the urgently needed investment stream into key industries and to end the chronic equity shortage of the corporate sector.

Finally, we are, where we could have been 3 years ago, would the then panicking Brexiteers not have fled from the responsibility of executing a Brexit being fought and won on massive lies, false promises and probably Russian support. King BoJo has entered Downing Street, and he has a mere 100 days to fulfill his Do-Or-Die Promise of leaving the European Union by October 31. And he will deliver. Another notorious liar, narcissist, and racist at the top of an atomic power, G7 country and permanent member of the UNSC. Another ruthless populist at the top of a should be guiding torch for democratic values and honest discourse. Inspired by President Trump in the US.

Should we be afraid? Not really. Having survived the Tariff Man in the White House, the Clown in Downing Street will be easy stuff to swallow. After three years of endless negotiations and complete stalemate, both Macron and Johnson are right in claiming that No Deal is not the end of the World. On the contrary, it could prove healthy to make a clear, fast and ugly break instead of dragging on for years. The German smallest denominator biggest compromise way would only lead to a slow, but steady decline and national humiliation and frustration of the UK. The Eton(ian) Mess that has been amassed since Cameron entered the kitchen is beating the German Bratwurst, as long as it is ruthlessly prepared and eaten fast. BoJo has fully understood this dynamic and will drive the British tanker full steam into No Deal while pretending to have his eyes set on an improved Brexit Deal. The composition of his new cabinet underlines his willingness for a fast and brutal implementation of Vote Leave. He has assembled a very gifted, dynamic team and the best campaigners in the country, preparing for an election if need be. We are assuming to see the following developments:

Brexit will happen on October 31 with No Deal or a largely stripped-down deal. The EU will be blamed for failure. The Tories will ultimately follow BoJo to avoid an election, the dissolution of the Conservative Party and complete chaos. Theresa May as Brexit Don Quijote with Philipp Hammond as her Sancho Panza will be forgotten fast.

The Brexit war cabinet will restore trust and confidence in the UK and Tory leadership, Nigel Farage might join the forces soon.

BoJo will imitate the success of Trump’s weaponization of social media and use a direct and intense link to voters and followers to chase Parliament and force MPs support.

The EU, led by Macron and Barnier, will not blink in the last minute. Disgust for BoJo, unwillingness to grant him any success, self-protection and complete Brexit Fatigue will guarantee this result.

After short term collapse and disruptions in some areas, recovery could be faster than expected and the country might profit from a new liberalization boom, fired by an economic policy of low taxes, no customs/tariffs, and less regulation. An economic head-on collision course with the EU. The London property market will go further down with the fear of No Deal consequences and a looming sterling crash, a perfect buying opportunity.

The Real Donald and BoJo will become the BFF couple of the year, cheering achievements of each other and booing opponents.

The Iran Nuclear Deal will be thrown under the bus by BoJo for the relationship with Trump, as will be the prospects of Huawei to supply 5G networks in the UK.

Turbulent times ahead in the UK. But finally, things are moving. Every end is a beginning! Hopefully, a wakeup-call for continental leaders to step out of the Merkel area lethargy.

God Save the Queen and good luck for all our British friends on the bumpy ride ahead.

State of the NationComments Off on ETON MESS – King BoJo is Eating the Cake and Having it – Or Not?

The power of established parties is eroding fast. So is the political lifespan of politicians. We are on the verge to a dynamic rollercoaster Turbo Democracy.

The name of the latest Austrian ex-chancellor is Kurz or translated into English Short. Today his government collapsed after the shortest period of office for a post-war chancellor in Austria. And while this can be attributed to a purely local phenomenon – a boozed far-right politician promised to sell out Austria to a self-declared niece of a Russian oligarch – the situation is simultaneously characteristic for the current political breeding ground. It took only ten days from the publication of a compromising video to the successful no-confidence vote on a highly popular Austrian Government, which was the first successful no-confidence vote in the post-war Austrian republic (and they tried 185 times before).

Political changes today happen fast and dramatically, the instant public discussion and reaction on all issues is chasing politicians and few are mastering to combine riding the ultimate populist wave with staying in office. Take some numbers of the results of EU parliament elections as a reference point:

The only six weeks old Brexit Party of Nigel Farage crushed all established parties and achieved instantly more than 30% of the votes in the UK in EU elections, while the Conservatives did not even come close to 10 % of the vote.

Salvini’s Lega Nord in Italy increased their share five-fold from 6 % in 2014 to an estimated 34% in 2019. Noteworthy that in 2014 Social democrats had still achieved 40% of the vote, while in today’s political landscape in Italy they are irrelevant.

The left and liberal hate figure Orban is one of the very few who can win an absolute majority of votes in Hungary.

Once a shooting star, who was himself able to storm into the Presidency in France, Macron has only received 20 % of support in the EU elections.

Social democrat and conservative parties get beaten up in nearly all European countries and in big numbers, they lose together more than 20% of their seats and do not control together – for the first time in history – a majority of seats in the European Parliament.

We are experiencing the rapid transformation of stable Western party-oriented democracies into instantaneous direct voting platforms on leaders and hot topics of the day. Welcome to the rollercoaster turbo democracy. And it promises to be exciting, turbulent and fast. Gone are the times when parties mattered more than people, when believes and values were the foundation of political parties, when people or families, or even whole quarters voted identically over decades for one party. All this has become meaningless. The very same instruments, that can be cornerstones of a fast, livid and direct democratic involvement of the citizens, can also act as the grave digger for stable and democratic societies. Different sides of the very same coin, the old law of polarity. We have an unprecedented level of communication, information, understanding, and exchange and yet we are more controlled, watched and influenced than ever. The ultimate political Instagram show.

Attributes of the rollercoaster turbo democracy are starting to materialize. They are all based on unlimited reach and direct access to people through internet and social media, the mental overflow of citizens through information overload, the speed of events and the immediate global journalistic processing, and the difficulty to differentiate true from fake:

From programs and parties to slogans and leaders: in times of rapid changes, parties and programs have proven to be too slow and rigid to adapt to the reality on the ground. Egocentric leaders feel the mood of the day and ride the populist wave. They are not interested in any kid of manifesto, only in approval ratings, media comments and likes from followers. They know how to reduce a message to a simple slogan that is penetrated thousands of times, whether true or false.

Short life span of politicians: what goes up, must come down. As the decade long march through party hierarchies is no more necessary for the rise of a politician, the new type of leader is often missing strong and loyal political armies. They are easily and fast recruited while the star is ascending, but support is dwindling once approval rates are going down. As the personal lifecycle of this new type of politician is shortened, naturally there is no interest in any long-term reforms or investments into the country.

Rapid rise and fall of political movements: Gifted leaders bypass lengthy party discussions to push their agenda with a direct link to citizens. They board a party or election platform for infrastructure and legitimacy reasons and transform these instantly into a personal election machinery, centered around a common cause and themselves. Failing in delivering the promised results, these movements disappear often faster than they come up.

Strong leaders and a trend to authoritarian leadership: in times of perceived insecurity and rapid change, people long for strong leaders to give them orientation. They give themselves an aura of above-the-law, gift-of-god vibe with the respective authoritarian rights to rule and dictate.

Propaganda reigns: The new leaders recognize the importance of direct and robust contact with their constituencies to avoid parliamentary discussion and/or media scrutiny. They build their own communication platform and channels. Once in office, they will avoid all critical discussions with media, the opposition or other critical voices. As demonstrated from Washington to Paris to Vienna, communication with media is then downgraded to a one-way street of personal propaganda and message control. Governmental agencies are abused and transformed into a personal propaganda apparatus, penetrating success stories to the believers.

Massive influencing: As the party system is fading as a stabilizer, foreign Governments, NGOs and other players are globally entering the arena to influence massively and directly the political discourse and public opinion on critical issues, and subsequently the outcome of elections. The Russian hoax and Ibiza-Gate in Austria are just the beginning.

Truth has no value: From the famous NHS lie during the Brexit campaign to the uncountable proven lies of the stable genius in the White House, leaders are exploiting the fact that people lose interest in political issues fast and are not able to memorize and control past messages. Holding the Guinness world record of lying in office, is no more an obstacle to running the most powerful nation in the World, but in the contrary a tool to retain power.

Brutalization of political communication: Avoiding any content-oriented discussion on political objectives and strategies, all communication is personalized. Political opponents and critical journalists are ridiculed and badmouthed. Everything is reduced to a with-me or against-me. Gifted politicians understand the need for entertainment and produce a Game of Thrones narrative for their audience.

With the exception of the global climate movement, this rollercoaster is so far better mastered by the nationalist, right-wing political forces from Trump to Bolsonaro, Duterte and Salvini. This is the main reason for their success! Until we will see a societal shift to more stability, a return to values and integrity, a stronger focus on community than on individuals and a longing for more social justice and cohesion, it can be assumed that it will stay like this. And yet, we should not take our current democratic system for granted. It will need a substantial overhaul and it has to be seen, whether an open, transparent and liberal democratic order can survive the turbo rollercoaster; and whether the parliamentary party system can cope with the post millennial age of ultra-rapid change, robotization and short-termism. Otherwise it will become obsolete. At this very moment, it looks more probable that managed democracies like Singapore or China will perform better and take the lead.

Enjoy the Show.

State of the NationComments Off on SHORT, SHORTER, SHORTEST – THE TURBO ROLLERCOASTER DEMOCRACY

Volodymyr Zelensky has been elected President of Ukraine in crushing defeat to incumbent Petro Poroshenko

Now it is official. The comedian Volodymyr Zelensky is the next President of Ukraine. While many observers and foreign experts are still astonished about the political experiment and public courage to put an unexperienced TV Star into the highest and most powerful political office in the country, it is first and foremost a demonstration of a powerful, energetic and lively democracy. That is good news. Neither the money, nor the political power or the control of the media, nor the patriotic staging could stop the crushing and deserved defeat of Petro Poroshenko. It is a message of great hope for a country who deserves a better leadership and future. Zelensky was right when he turned to other former Soviet Republics after the victory yesterday by telling them that indeed everything is possible. Accordingly, this election could turn into a harbinger for other countries alike.

As is with all dreams, the morning after a transformation of blurring pictures of hope and glory into purpose and hard work needs to start. And it will crucially depend on the next months, whether the dreams of so many supporters can be turned into a better reality of their lives. By appointing a truly forward-looking Government, by preparing elections to turn Parliament into an arena of trust and commitment and to dis-own it from oligarchs, and by selecting people for key positions in the country gifted and willing to energetically move the country forward.

After the Maidan protests and the ousting of President Yanukovich, Poroschenko had five years to prove that he understood what the people of Ukraine needed and were longing for and to act accordingly. He did not. As a result of his and his Government’s failure, the country today and its inhabitants are poorer, the territory is smaller, the conflict in the East has not ended, the Oligarchy is still in full power, and a selected group of people have amassed more wealth on foreign bank accounts. Another loss of time and betrayal of simple Ukrainians. Zelensky’s rise to power is the shameful sentence of complete failure on Poroschenko’s term.

The US, the European Union, and the international institutions would do well to listen carefully to the messages of the people, too. It is not wise nor efficient to only aim at stabilizing a counterpole and political bulwark against Russia. It is not the artificial language topic that keeps the Ukrainians awake at night, in a country where Russian is a dear mother tongue to many. It is also not the creation of an independent church that advances a country, where many have a decade long relation to their priests and parishes and the proximity to the Russian church is a century-long tradition. It is not even the fighting in the East and the annexation of Crimea by Russia or the demonization of President Putin and the Russian people in a country, where most have family ties to Russia and the Russian culture and traditions are embedded in everyday life. It is also not the accession to the EU or NATO that can rally people behind a common purpose or keep the young and energetic in the country.

No. It is like so often the economy, stupid. The harsh reality of money in the pocket and sheer survival at the end of the month. To get closer to European living standards is what people are dreaming about, and that students and young workers can stay in Ukraine with a perspective of development and modest wealth, and do not have to leave the country in millions to Poland, Canada or other countries to realize a decent life. The things that need to be done, are clear for thirty years, and it will depend on the political will of Zelensky and his key management team of Ukraine, whether they finally take the necessary steps and transform a country of endless potential into a country with a better future for the many and not bigger cash stacks for the few:

Bring in politicians who think first about their country

Simplify rules and regulations in all areas of society

Reduce state administration and bureaucracy on all levels

Build an independent judiciary

Ensure property rights

Stop corruption

Break up Oligarchy

Clawback unjust profits from corruption and bring criminals to justice

Normalize relations with Russia

Build the economic and societal foundation prior to a discussion of EU or NATO membership

The first twelve months for Zelensky will be crucial and he will need to be brutal to bring this change to his country against enormous, powerful, well organized and wealthy resistance. The necessary political will and perseverance for such an undertaking cannot and should not be underestimated, as well as the necessary luck and foresight he will need to choose the right people for his team from the many advisors who will come forward now. As a reward and result, Ukraine has the prospect to become more European, with young Ukrainians wanting to build their personal future in this country, and separatists in the East getting under pressure to reunite with a booming Ukraine. In that case, Ukraine can turn into one of the hottest global investment locations for many years to come, and the coming Easter week a herald for the resurrection of the country.

Since ancient times wise men have tried to read from stars, bones, runes, bird flight patterns, climate conditions and many other natural and supernatural events. Understanding patterns in a world where everything is linked with everything in a hyper-complex and ever-accelerating way gets more difficult by the day – many have given up.

The loss of general understanding and foresight is obvious: Our children have to skip school to tell us about the importance to invest into the preservation of our planet (which can be done with manageable resources today) while we drown a rotten financial system in money for free and endless taxpayer funds. We destroy our middle classes, write off the development perspectives of a whole generation, and are spectators to the rise of populists, minority bashers, warmongers and other dangerous propaganda from the forgotten ashes of WW2. We pour mountains of antibiotics into our food chain and are astonished about the renaissance of superbugs. And we elect people into office, who are outright fascist, extremist, unfit to govern, or simply idiots.

Time to lean back, have a good glass of red wine and read the meaning and direction of the World in the Tannins (this could be the future of fortune telling as humanity has given up on climate, animals and other traditional means, but alcoholism is on the rise!). Over the last days, 2.000 visitors have been in Bordeaux/France on their annual pilgrimage to understand the future of the best wines. We have participated in this pilgrimage and want to share what we have learned in discussions with winemakers, dealers, journalists, and serious wine addicts – and try to transpose these learnings into business reality. In a holistic world where up is down, and down is up, we can overcome the polarity between left bank and right bank, Merlot and Cabernet and clearly see our economic and political state and future in studying the Tannins.

What do the Tannins reveal:

China in Trouble: The last years, many of us thought to have arrived in Chinatown, not in Bordeaux, as the city was crowded with Chinese wine traders, journalists and investors. The breadth of the Chinese invasion in Bordeaux had easily matched their expansion in the South China Sea in previous years. While Chinese flags are still raised in front of famous Chateaux, we are finally back to normal. Chinese visitors are significantly lower in numbers this year. Obviously, Chinese traders are expecting less demand in their home country …

Russians turn homegrown: Following sanctions, an economic downturn that is mocking the official numbers, and increasing problems to invent new stories about the origin of money vis a vis scared private bankers, the Russian consumer tends to orientate towards culturally closer and most of all cheaper wines, i.e. from Moldova or Georgia. The French extravaganza is restricted to the real top end of the political and business class, and their numbers are shrinking.

Recession in Europe: Everybody keeps talking about prices. While in 2015 and 2016, experts were indulging into the great quality of the wines, accepting the price levels that would be set by the winemaker, this year the constant background noise of checking and complaining about pricing is omnipresent. In anticipation of the economic downturn, everybody is nervous about the looming price releases and their acceptance in the market

Democracies vs. Monarchies: Following Trump’s logic of cheering to life-long appointments of Presidents, there seems to be a benefit of non-democratic leadership. Whether it be the brilliant architectural restructuring of the city by Haussmann in the second half of the 19th century, the feudal order of organizing the Chateaux, or the multi-generational efforts of wine growing families into producing an ever-improving wine, there is reason to believe that for some developments of humanity, political leadership that stays beyond the narrow definition of an election period has a certain value.

The Brexit Psychosis: Brexit everywhere!!! The Brexit fatigue sensation has arrived in Bordeaux. Even additional glasses of wine and endless discussions do not lead to a better understanding of what is going on and to what it will eventually lead. Yet, new customs and duties on wine and a potentially weak sterling might contribute to a lower red wine demand, and pressure on prices. The World will move on, yellow vests might cry “French wine to the French” and the Eton elite will continue to indulge in Cheval Blanc and Latour wines.

The Deflationary Effect of Globalization is Nonsense: Inflation is there! The price development of the leading French wines demonstrates convincingly, that in a globalized world, prices can go up steeply. As soon as there is a limitation on production or monopolization of origin or supply, the only way is up.

We Only Taste What We Know: In the internet and robot age, where everybody is his own doctor, lawyer, forecaster and shrink, we re-appreciate the old Greek philosophic saying that we have first to know something before we see it or taste it.

Price Follows Brand Follows Quality Follows Continuity Follows Family: Having had dinner with a winemaker who is producing wine in the 27th generation of his family, and being witness to an industry where it takes a generation to start, grow and craft a truly outstanding wine you understand the meaning of continuity, which can only result from the responsibility of a family preparing the field for the next generation to come.

Or in a nutshell: Whatever happens in the World, happens in Bordeaux. The uncertainty and political sarcasm that you hear everywhere at the fireside chats is just another reflection of our current global downturn and political chaos. In that regard, the delivery of an excellent 2018 wine shall be a good harbinger for the excellent year 2021, when we can finally taste the bottled wines of 2018.

All best and Cheers

Marc

Background ReadingComments Off on WHAT THE TANNINS OF BORDEAUX PRIMEUR TASTING 2019 TELL US ABOUT THE STATE OF THE WORLD

The very dynamic year 2018 comes to an end and the events of this year will shape the coming decade and beyond. We are witnessing a rapid transformation and disruption of our global word order, and the end-game of the domination of Western-style democracies.

Main events of the past 12 months

TARIFF MAN hits the Chinese Dragon: The self-proclaimed tariff man has started a full-scale trade war with China. However, the ultimate USG goal is to weaken or at least slowdown China on its path to become a dominant world power, which has started to flex its muscles not only in the South China Sea but also in Cyber Space. More than 90% of all DOJ followed economic espionage cases and 2/3 of all economic theft cases in the US are linked to China, which is accused of a sophisticated “rob, replicate, replace” strategy. The damage of these activities is much bigger than from any unfair trade practice – and the US not willing to tolerate this any longer. Therefore, any wishful thinking of a quick resolution of the trade dispute is an illusion. EU naively watching at the sidelines.

The Great Populist Revolution: After the US and France, Italy and Brazil have followed the sweet seduction of populist leaders, more countries will follow. Be attentive – this happened during an economic upturn! Western democratic systems seem to have reached their limits in a largely trend-based, social media-driven society, and we might have reached the end-phase of this form of governance with the renaissance of managed democracies and authoritarian leaders. Assuming an economic downturn in 2019, this development will accelerate. Yellow vests in France are just the beginning.

The Fake Avalanche: Led by the US President, the general public and every individual has been filled up with a mountain of fake news, misleading information and lies. The post-truth age is reality and it plays into the hands of government and corporate manipulators. It will lead to an identity crisis of traditional, social media and all types of electronic publications. There is an urgent need for credible answers and the build-up of a quality check/stamp by this industry.

The End of the Rules-Based World Order: UNSC Members have finally driven the UN into meaninglessness. Today, the UN has lost all ambition to act as an international body to manage, calm or solve global conflicts. We are completely dependent on the power-based boots on the ground politics of the dominant nations, who deliberately destroy rules-based global systems and processes. UN useless, WTO obsolete, Climate Agreement dead, EU disintegrating – and the results start to materialize: unchained cyber-attacks and warfare, technology and energy used as a power instrument, open chemical attacks, and state-sponsored murders, journalists killed or in prisons, international contracts dumped, resistant superbugs and viruses on the rise. We are entering a truly Darwinian world order.

Other important events in 2018 included the (official) start of Genetically Modified Humans (GMH) in China, the Mueller investigation and economic and reputational cracks in technology giants like Apple, Google, and Facebook.

Review Forecast 2018

We had dared to make a series of forecasts for 2018 at the end of last year – some in stark contrast to banks and other analysts. Without going into the details and the reasoning, the review shows as follows:

The Return of the Dollar: Correct

US turning against China: Correct

Energy Price Surge: Wrong

Inflation Reloaded: Neutral

Cryptocurrency Breakdown: Correct

Bears go Hunting: Correct

King BoJo plays Hamlet: Correct

French Renaissance: Wrong

Forecast 2019

Now to the more important look into the crystal ball of 2019 developments:

The Ugly R-Word on the Wall: US and parts of Europe will move into recession area in the 2nd half of 2019. Trade wars, rising interest rates in USD and EUR, fast de-leveraging, end of quantitative easing, fiscal tightening of many G20 states and the end of the China boom will all happen more or less simultaneously and lead to a contraction of global output and consumption.

Continued Confrontation Between US and China: The battle has only started. The US will try to further harm the economic, technological and military rise of China. Interim negotiation results will be celebrated publicly, but not last long.

China Economy Faltering: China will not be able to compensate for the abrupt barriers to the US market and the hostile environment for their leading technology companies. We expect the first real and painful contraction in China, with a massive impact on the employment and housing market. New markets, that are currently opened, will not be able to compensate in time. How a generation, which has experienced nothing but double-digit growth will cope with this situation, is yet to be seen.

Fake Trump Bubble Bursts: Congress will start impeachment procedures against Donald Trump for alleged criminal behavior. The biggest fake bubble with more than 6.000 officially counted lies and grossly misleading statements, that were published by POTUS while in office, will start to burst and haunt him. And many knives are prepared, both in the US and abroad.

The End of Germany’s Golden Decade: Welcome to reality, Germany’s export-oriented engineering, car and machine building industries have driven an employment and tax revenue boom in Germany over the last ten years. With a capex contraction in China and mounting barriers to international trade, Germany will be one of the countries to suffer the most. It will backfire now, that over the past ten years, critical investments into infrastructure, education, and future technologies have not happened, and that necessary structural reforms were neglected.

To Brexit or Not to Brexit: The biggest ever national humiliation continues. The most probable scenario is: Theresa May will not bring her Brexit deal through parliament. The UK will ask the EU for a delay/suspension of Article 50 for 6-12 months. A cross-party coalition will agree on a much softer Brexit, with the UK staying in the customs union. Labour will achieve new elections as a bargain price for agreeing to this deal. The Tory party might split.

EU under Fire: 2019 will be a year of truth for the EU. Parliamentary elections and the quest for a new Head of the Commission as well as the ECB will bring the big topics to the center stage: austerity vs. free spending, the role of the ECB, liberalism vs. nationalism, depth of integration, solidarity on the borders, budget 2020 without the UK as a payer. A lot will depend on the direction France will take in 2019 and the willingness of net payers to shoulder additional costs in order to contain disintegrative forces.

Ukraine and Russia: both the Russian and the Ukrainian leadership might profit from a re-ignited frozen conflict, that turns into open fighting, a real war in Ukraine is close to reality. Putin might use the tiredness of EU member states of going against Russia and the political bombshell of an impeachment process against Trump to test the resilience of the West with a further landgrab in Ukraine. The current schism between Ukrainian and Russian Orthodox church would deliver a perfect pretext for action.

Energy Prices: Recession ahead, and Chinese production on the brakes, we expect a further downturn in energy prices towards the 30 USD/barrel price range. Only a middle east war would be a real game changer to this trend.

USD: in contrast to this year, we see the USD weakening in the coming 12 months: a fast deteriorating US economy, together with a weakened US President, and international trading partners who try to get at least partially independent from the USD, will lead to less demand for USD. However, an un-orderly no deal Brexit and a new Euro crisis originating in Italian and/or French spending fantasies have the potential to reverse this macro trend.

Inflation and Interest Rates: Interest rates will go up, both in the US and Europe – and in our opinion faster and stronger than many believe. Central banks will only stop monetary tightening once the economy has moved into recession at the end of 2019. Until then, tariffs and tight labor markets will lead to a pick-up in inflation.

Bear Party: This time bulls will wait in vain for a market rebound. Profound corrections into bearish spheres on all major stock markets in the making, biggest losses in Germany and UK.

Cyber Attacks: Prepare for new waves of aggressive cyber attacks. While the US and the UK will be in retaliation mode against China and Russia, respectively, we might see a new dimension of attacks both on the government and corporate level.

The good news: (1) there are many ways to invest successfully during recessions, every risk is an opportunity; (2) nobody can claim that there were no warnings; (3) the catharsis is needed prior to any new lasting and healthy upswing.

This article is a summary of a brain teasing session that we held at the

NUS (National University of Singapore) Medicine International Conference, Singapore, November 27, 2018 and

at the Taras Schevchenko University, Faculty for Philosophy, Kyiv/Ukraine, October 2018

The Widening Cognitive Gap

Humanity is facing its biggest challenge yet. Since the beginning of mankind our thinking capabilities were beyond our technological capabilities. We could calculate the path of planets long before the first computers were developed and adapt our societies and legal systems to reflect the profound changes and possibilities these technologies were offering. We were mastering the technologies, alongside with understanding their impact, adapting ourselves and staying mentally sane at the same time.

This period ends abruptly. As our technological capabilities have started to grow exponentially, our cognitive skills are only growing gradually. This leads to a widening gap between what we can do and our understanding of its impact. The necessary adaptations of the way how we live and interact are not keeping up the pace. Huge parts of the population are intellectually left behind.

In case our societies and leaderships do not find appropriate answers and develop naturally into a higher state of governance, they will be abolished through revolutions or a putsch by small hyper-intelligent elites or robots, or a hybrid of both.

Philosophical Challenges Ahead

The main philosophical challenges can be summarized as follows:

the creation and development of knowledge

the understanding and differentiation between right and wrong

the understanding of the purpose of life

They are valid on an individual level, and on a societal level, and have a huge impact on our daily life beyond any theoretical value. The answers to and societal consensus on these questions are defining the morale foundation of our societies, the way we interact with each other, the foundation of our laws and understanding of justice, the basis for all social contracts and state governance, and last but not least the breeding ground for our mental sanity and happiness.

Now, technological change and capabilities are creating a new playfield for these philosophical challenges and insights. This playfield questions the very fundamentals of our thinking, which have been stable for the last 3.000 years:

Knowledge creation is no more happening exclusively through human thinking, dispute, exchange and analysis, but can by artificially created and exchanged by machines (Artificial Intelligence, AI). Who is in charge?

Too much data and information lead to a constant overload and overflow of the human cognitive system and hinder clear thinking. There is a naïve tendency to surrender to algorithms.

Truth and Beliefs are getting blurred and manipulated in a digital and virtual world. We are entering a post-truth age, in which true and fake are more and more difficult to distinguish.

Traditional purposes and boundaries of human life are no longer valid, this will cause a metamorphosis of humans and human interaction.

These profound challenges and questions to human societies are illustrated in six short take-aways, which are neither exclusive or exhaustive. They have a pure exemplary character for the challenges ahead of humanity.

(1) Freedom or Slavery: How free are we?

Everybody knows about Tinder and other dating applications. The basic idea is that people enter their profiles based on a set of parameters and preferences and are automatically matched by a neutral, objective algorithm, and set up to meet. So far so good. Instead of meeting at a bar, university, or work, Bob and Allison meet in the cloud. But imagine Bob and Allison meet based on a manipulated algorithm, or because someone wanted them to meet. Most users have a complete blind trust in algorithms, assuming that what comes out of these engines is neutral, objective and solely based on their criteria. We choose jobs, travel plans, drugs, business partners, romantic or sexual encounters, and even Presidents on that basis. Often because someone wants us to make these choices, not because it really matches our needs or preferences. Choices are increasingly outsourced to algorithms, which in reality are not neutral, of course. For the sake of convenience, anonymity and efficiency, we surrender subconsciously and naively our freedom of choice and widely open the doors to any form of manipulation. From the US elections to the strange ads following your search paths on the web, all possibilities to manipulation are and will always be fully exploited. The noise of constant information makes it easy for manipulators to hide themselves and their intentions and for us difficult to impossible to critically reflect and decide. In many countries every second relationship is originating in the cloud. There are predictions that the Millennials will be the last free generation on this planet.

(2) How to cope in a world where fake is real and real is fake?

Knowledge creation is based on the understanding of truth and beliefs, on a profound differentiation between true and false. We are moving high speed into a reality, where it is difficult to make this distinction. The digitalization and virtualization of all contents makes it too easy to digitally change, enhance or modify the truth: pictures, videos, sounds, statements, but also health data, personalities, bank account data. We do not have a truth stamp yet. While some politicians exploit this situation ruthlessly and create an alternative facts and post-truth habitat (i.e. The Washington Post counts 6.420 lies or grossly misleading statements of President Trump in his 649 days of office to date). At the same time, we openly provide biometric data, personal information and preferences, pictures, shopping and movement patterns and even sexual preferences to a big and unregulated data cloud, where these data will be stored forever.

With the foundation of knowledge creation in shatters, we give in to noise. The loudest will win the battle, the one who can push out a message to a maximum number of listeners and multipliers, no matter whether wrong or wright. Will the noise win in the end and be the new alternative truth? Will we be constantly influenced and manipulated? How can we navigate and orientate ourselves in a world, where we are simultaneously suffering from an overloaded brain and dramatically shrinking attention spans?

(3) Fusion of Man and Machine: The Identity Quest

It was a big surprise to science when in the beginning of the Millennium, US universities discovered that there was not even a 5 % difference between the DNA of a human and chimpanzee. Elon Musk has stated – and I tend to believe this estimation – that humanity had only a chance of survival and dominance vis-à-vis machines, in case that we fused with machines. But where will we stop to be human and start to be a machine, with 5 % of machine parts, or 50 % or 95 %?

This fusion has already started and will accelerate. It has taken off with the repair of defects/diseases from automated insulin pumps to bionic extremities, but this is only a starting point of human enhancements. The discussion of the essence of what is human has to start. Do we allow students with memory enhancements and runners with artificial joints? Is a human with 50 % machine parts still a human? And what happens if machines take over? Is a machine with an implanted human brain considered to be human? Can it register a residence and vote? It might sound sci-fi, but this process has started and is developing by leaps and bounds. Do not forget: the first Iphone was only introduced in 2007, and most people use it (or another smartphone/tablet) today more than 4 hours per day.

(4) Paradise 2.0: Robots work, Humans relax

Panic has arrived at the workforce level. The automation and robotization of large areas of our daily life and operations, will lead to mass extinction of low skilled and repetitive jobs. From automated trucks, to auto-pilot surgeries, sex robots, nurses, bankers, lawyers, huge numbers of jobs are set to disappear, and for the first time in history it happens across all industries. And we are talking huge numbers. In Germany alone, we have estimated 700.000 truck drivers. Who would believe we need those drivers in ten years from now and that we will have an alternative paid occupation for them? And this automation tsunami will hit white collar workers as well. How many banking outlets will survive in the next 10 years and what will happen to all the employees. What could be a paradise on earth, where humans relax and robots do the work, will not materialize with today’s distribution of wealth where the ownership of machines and capital is highly concentrated with a small group of super-rich. The way-out can only be a strategy of “panem et circenses” or a free general income for everyone in combination with broad entertainment and development offerings. The critical questions of who will own the robots, who will reap the benefits, what will be our occupation and purpose are getting louder. Whether our Western democracies will survive this strain on social systems in combination with the described proliferation of fake, has yet to be seen. We might see revolutions, the putsch of super elites or the transformation into managed democracies, such as Singapore or China, the end-game for Western democracies as we know them. There is no guarantee that a pure blood democracy will be the best form of governance to address the challenges of the future (see Brexit). In this regard, the mounting anger of wide circles of the population, the enormous polarity of our societies and the rise of populist movements is a bad foreboding of what to come. Donald Trump is perfectly Zeitgeist, and as in other countries his success is much more based on the hopelessness of the global middle class rather than on hyped immigration threats.

(5) Waiting for the spiritual revolution

If you ask teenagers today what they want to be later, you will not hear doctor, scientist or policeman. Many will answer that they want to be rich and famous. The life of the personal avatar is more important than the real one. Enormous time and energy is spent to create and communicate in the cloud an illusion of a perfect, pretty and sunny life. Confronted with real life, mass psychosis and depression are guaranteed. The meaning of life is reduced to the material riches. At the same time and, not surprisingly, all studies show, that people are to a high extent lonely, depressed, empty and self-centered. Their jobs are meaningless and boring, useless and they nevertheless suffer from burn-our syndromes. We literally touch our smartphones in average 4,5 hours per day – and human beings for mere 2 minutes. First we have lost our spiritual beliefs and ability to mediate in a fourth dimension (and do not forget: not to believe is also a belief). Are we now on the path to losing our human interface, hiding in anonymity and leaving all communication and interaction to technology? Where will the human race end up with, if we only concentrate on the left-hand side of our brain, on pure materialism – are we ourselves mutating into machines?

The good news: the spiritual revolution will come. As with many things, once the pendulum has swung too strong into one direction, it will bounce back with brutal force. It is only a matter of time and urgency. Humanity might realize it by itself in the end state of the global burn-out or by being forced into humility having experienced a global war or health crisis. Yet, the re-discovery of our minds and spirituality in combination with our technological skills might be the beginning of a new development stage for our race.

(6) On the verge to eternal life: the hunt for the ageing gene

There is no natural law/logic that we age and die, when cells in principle have the ability to renew and grow. So far, modern medicine was very successful in pushing up the average expectancy of life, with longevity being a mass phenomenon. However, the absolute maximum age of human beings has barely altered. We are entering an age where this will change. With the understanding of the human genome and the introduction of epigenomics, it is only a matter of time, resources and computing power until we will have found the triggers to stop and even revoke the ageing process of critical cells for our life. The hunt for the ageing gene and epigenomics is in full swing, and it will develop into the biggest business this planet has ever seen.

Then, humanity will reach the final philosophical question. The quest for the purpose of life is profoundly different in such a context. What will we do, if our life span is massively extended, and who might decide how long we live. Are we heading towards a super-elite, super-performing and longer living, which will dominate the rest of humanity, as Stephen Hawking has predicted in his last book? Eternal life can be frightening. Or are we entering the final level of our development, the human end-game, the last level of the development of our race? Note, scientists of the University Jerusalem have found out in an in-depth study, that male fertility had decreased by more than 50 % over the last 40 years, and the trend continues. So far nobody has found a satisfactory or consistent explanation for this phenomenon.

(7) Summary

We have seen tremendous technological progress over the past decades. This has created great material wealth and well-being for many countries and its peoples. It has also strongly increased the inter-connectivity of people, communities and countries. Global resources have massively been allocated to advance this technological progress. However, this has come at the price of a slow erosion of our human interfaces and negligence of the social impact of the rapid progress. The technological progress has largely outpaced our cognitive mastering and social adaptation. It is time for a renaissance of social sciences to better understand how this progress will shape the societies in the future and how our race will stay in control.

The only time, when technology has shortly outpaced our social systems, was the beginning of the industrial revolution. This ended in real revolutions, wars, the end of aristocracy, the introduction of human rights and democratic systems. Humanity had the comfort of a 50-100 years adaptation period at that time. It can be excluded that we will be granted the luxury of such a slow-motion adaptation again.

Background ReadingComments Off on Philosophy in a World of Robots – BIG questions for great thinkers